9/11 reflections, market fatigue: Oracle's solo surge masks broader weakness ahead of CPI

• 24 years later and the pain of this day never goes away.
• PPI – surprises to the downside – bolstering the rate cut narrative.
• CPI due at 8:30 – will it support of deny that narrative.
• Bonds rise, Oil flat and Gold is lower.
• Try the Apple/Cinnamon Pork Chops.

It’s hard to believe it has been 24 years since that fateful attack on American soil — 9/11, a day that will forever live in infamy. The emotions remain raw, as if it were yesterday. I continue to think of those we lost, the families left behind, and the countless lives forever changed.

For those of us who lived it — especially here in New York, Washington, DC and Shanksville, PA — the images, the sounds, the fear, and the unity that followed are etched into our hearts. We remember the heroes who ran toward danger, the resilience of a nation that refused to be broken, and the reminder that freedom is both precious and fragile. And for those that have ‘no’ recollection of the event, I pray they understand the impact of what it meant to America and more importantly to Freedom.

As I reflect today, I am reminded not only of the sorrow but also of the strength that rose from the ashes. We honor the memory of the fallen, we stand with the families, and we carry forward the lesson that even in our darkest hour, America’s spirit endures.

(Just a small correction – I said the elevator transfer floor was 46, it was the 44^th floor).

Now, back to the markets – PPI came in weaker than expected (which is a good thing – weaker means less upward pressure on prices). Top line m/m it was -0.1%, y/y it came in at +2.6% - well below the estimates of +0.3% and 3.3% respectively.

Ex Food and Energy – m/m of -0.1% and y/y of +2.8% again down from the expectations of +0.3% and +3.5% respectively. As I said in my note yesterday - Should it be weaker, then expect calls for a bigger rate cut to hit the tape and BOOM, that is exactly what happened. Calls for bigger or MORE rate cuts are now the narrative…. but let’s see what today’s CPI says.

Now Top line CPI m/m is expected to tick slightly higher at +0.3% vs. +0.2% last month, y/y of +2.9% vs +2.7%, ok, that should not be a surprise considering last months PPI was off the charts, so many do expect to see prices at the consumer level to tick up just a bit – yet surprisingly, CPI figures Ex food and energy are expected to be unchanged at +0.3% and +3.1% respectively.

Again - Should it come in as expected, it will reinforce the idea that while consumer prices remain slightly elevated, they’re not accelerating out of control — giving the Fed even more room to lean toward rate cuts. Should it rise, it will cause more confusion for the FED – because rising prices should cause the FED to hold rates steady. Should it come in weaker, then expect calls for a bigger rate cute to hit the tape.

But here is the issue. The labor market is clearly showing some signs of weakening, Both ADP and NFP were weaker, the JOLTS reports showed a weakening labor market and the BLS just revised job growth over the past year down nearly 1 mil jobs, Manufacturing PMI’s are in the contraction zone.

Conversely PPI showed improvement, Mortgage Apps (yesterday) ticked up big at +9.2% up from -1.2% last week. Services PMI’s remain in the expansion zone, in fact they never left that zone. Unemployment at 4.3% remains at what is considered ‘full employment’, although Underemployment is ticking up and may be the ‘canary in the coal mine’.

In the end, it remains confusing for investors and the FED – and so stocks did what? The Dow lost 220 pts, the S&P rose 20 pts, the Nasdaq rose 7 pts (think ORCL +36% in one day – I’ll discuss below). The Russell lost 4 pts, the Transports gave back 56 pts, the Equal Weight S&P lost 10 pts while the Mag 7 gave up 162 pts.

The truth is that stocks were weaker across the board – and don’t be fooled by the S&P and Nasdaq finishing slightly higher. That uptick can be traced back to just one name: ORCL, which surged 36% (up $87) to close at $328 after reporting ‘blow out results. Remember, the S&P is a market-cap weighted index, meaning the biggest names carry the biggest sway. At a $934 billion market cap, ORCL is a heavy hitter.

But here’s the catch – ORCL isn’t in the Dow, which is why that index moved lower. It’s not in the Russell or the Transports either. And when you strip away its oversized influence – as the Equal Weight S&P does – the market actually fell. ORCL isn’t a Mag 7 name either, and if you look at them, they were down too.

So, to my point – the broader market feels a little tired. Not completely exhausted but definitely showing some fatigue ahead of next week’s FOMC meeting.

Now here is the impact of ORCL yesterday on the S&P and since ORCL is a NYSE listed stock, it did not have a direct impact on the Nasdaq but is credited with helping to push the Nasdaq names slightly higher due to capital ‘re-allocation’ post their stellar earnings report.

The S&P 500 gained 0.3% (up 19.6 pts) to close at 6,532. Oracle surged 36% to $328.33, adding about $230B in market cap and lifting its value to $933 Billion – roughly 1.8% of the S&P’s ~$50T market cap.

Weighted at 1.8%, Oracle’s 36% jump translates into a 0.66% boost to the index. Since the S&P itself only rose 0.3%, Oracle was responsible for 220% of the gain – meaning it more than carried the index while other sectors (like consumer discretionary -1.6% and healthcare -1.1%) pulled it down.

Bottom line: without Oracle, the S&P would have finished in the red. But today is another day.

Bonds rose, the TLT up 0.6% while the TLH gained 0.4% - leaving these two market measures up 2.7% and 3.5% ytd respectively. The 10 yr fell 5 bps to end the day at 4.03% after testing a low of 4.02%, the 30-yr also ended the day down 3 bps to end the day at 4.70%, after testing as low as 4.66%.

Oil is trading at $63.35 and remains solidly between trendline support at $62.85 and trendline resistance at $64.25.

Gold churned yesterday, rising $14 to end the day at $3,640. This morning, gold is down $25 at $3,615 as gold traders are now convinced that the FED will only cut rates by 25 bps – vs. 50 bps. Although they still expect 3 total rate cuts (75 bps) before year end. Gold is up nearly 40% ytd – the move credited to the usual suspects – the safety trade (think global and political unrest), central bank buying (India and China BIG buyers) and rising expectations of the beginning of a rate cut ‘cycle’.

US futures are fighting hard to move higher……. Dow futures are +48, S&P’s down 3, Nasdaq up 48 while the Russell is -3.

European markets are mostly higher after yesterday’s better than expected PPI and the expectation of today’s CPI. France is in the lead – up 0.6% while Germany is down 0.1%. The EU has NOT raised tariffs on India and China at Trump’s request – they are pushing back and would rather discuss more sanctions saying that tariffs would require ‘legal justification, take time and disrupt trade’.

The S&P closed at 6532 up 20 pts. A trendline drawn from the November, December highs suggests that we are once again kissing resistance right here at 6535 – but the interpretation is in the eye of the beholder. Either we kiss it and fail, or we kiss it and penetrate – it’s a jump ball!

Hopefully – we get some more insight at 8:30 am. Like yesterday, the tone of this report will help set the tone for next week’s FOMC meeting.

Apple/cinnamon pork chops

Here is an interesting and easy recipe that will change the way you think about Pork Chops....easy to make, pleasing to the eye, and delicious.... It takes no more than 25 mins to prepare and serve and is a very popular pork recipe.

You will need: 4 chops - on or off the bone (your choice - I prefer on the bone), butter, brown sugar, cinnamon, nutmeg, s&p, apples and crushed pecans (maybe like 3 tblspn).

In a bowl - add 3 tbls of brown sugar, dash of nutmeg, about 1 tsp of cinnamon. - set aside.

Peel and slice the apples into thin slices - set aside.

Season chops with s&p. In a sauté pan - heat some butter and add chops and brown on each side for about 4 mins - depending on thickness.

When the chops are done - remove and place in a warm oven –

Using the same pan - add a dollop of butter and then the apples, pecans and brown sugar mix to the pan - cook until tender. This creates a delicious "apple sauce” -

Do not overcook the apples as they will turn to mush.... When done - present the chop on a warmed plate and dress with the apple/brown sugar mixture.... I would accompany a baked sweet potato sliced open with a dab of butter and a large mixed green salad. Enjoy with a nice Chianti.